EXHIBIT
      10.1

     

    SHARE
      PURCHASE AGREEMENT

     

    This
      Share Purchase Agreement (this “Agreement”)
      is
      dated as of June 25, 2008 between Document Security Systems, Inc., a New York
      corporation (the “Company”),
      and
      Walton Invesco Inc. (“Purchaser”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”),
      the
      Company desires to issue and sell to Purchaser, and Purchaser desires to
      purchase from the Company, certain securities of the Company as more fully
      described in this Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and Purchaser agree as
      follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    1.1
       Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, the following terms
      have the meanings indicated:

     

    “Affiliate”
      means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144 under the Securities Act.


     

    “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    “Closing”
      means
      the closing of the purchase and sale of the Shares pursuant to Section
      2.1.

     

    “Closing
      Date”
      means
      the date of the Closing.

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
      means
      the common stock of the Company, par value $.02 per share.

     

    “Convertible
      Securities”
means
      any stock or securities (other than Options) convertible into or exercisable
      or
      exchangeable for Common Stock.

     

    “Effective
      Date”
      means
      the date that the Registration Statement is first declared effective by the
      Commission.

     


    
      
         

      

      
        
        

        
          

        

      

      
         

      

    


    “Eligible
      Market”
      means
      any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ
      National Market or the NASDAQ SmallCap Market.

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

     

    “Losses”
      means
      any and all losses, claims, damages, liabilities, settlement costs and expenses,
      including, without limitation, costs of preparation and reasonable attorneys’
fees, but excluding any consequential losses, including lost
      profits.

     

    “Options”
means
      any rights, warrants or options to subscribe for or purchase Common Stock or
      Convertible Securities.

     

    “Person”
      means
      any individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision thereof) or any court
      or
      other federal, state, local or other governmental authority or other entity
      of
      any kind.

     

    “Proceeding”
      means an
      action, claim, suit, investigation or proceeding (including, without limitation,
      an investigation or partial proceeding, such as a deposition), whether commenced
      or threatened.

     

    “Prospectus”
      means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by the Registration Statement,
      and
      all other amendments and supplements to the Prospectus including post effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus. 

     

    “Registrable
      Securities”
      means
      any Common Stock issued or issuable pursuant to this Agreement, together with
      any securities issued or issuable upon any stock split, dividend or other
      distribution, recapitalization or similar event with respect to the
      foregoing.

     

    “Registration
      Statement”
      means
      each registration statement required to be filed under Article
      VI,
      including (in each case) the Prospectus, amendments and supplements to such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in such registration
      statement.

     

    “Rule
      144,” “Rule
      415,”
      and
“Rule
      424”
      means
      Rule 144, Rule 415 and Rule 424, respectively, promulgated by the Commission
      pursuant to the Securities Act, as such Rules may be amended from time to time,
      or any similar rule or regulation hereafter adopted by the Commission having
      substantially the same effect as such Rule.

     

    “Trading
      Day”
      means
      (a) any day on which the Common Stock is listed or quoted and traded on its
      primary Trading Market, or (b) if the Common Stock is not then

     


    
      
         

      

      
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    listed
      or
      quoted and traded on any Eligible Market, then a day on which trading occurs
      on
      the OTC Bulletin Board (or any successor thereto), or (c) if trading ceases
      to
      occur on the OTC Bulletin Board (or any successor thereto), any Business
      Day.

     

    “Trading
      Market”
      means
      the NASDAQ SmallCap Market or any other Eligible Market, or any national
      securities exchange, market or trading or quotation facility on which the Common
      Stock is then listed or quoted.

     

    “Transfer
      Agent Instructions”
means
      the transfer agent instructions, executed by the Company and delivered to and
      acknowledged in writing by the Company’s transfer agent.

     

    ARTICLE
      II

    PURCHASE
      AND SALE

     

    2.1
       Closing.
      Subject
      to the terms and conditions set forth in this Agreement, at the Closing the
      Company shall issue and sell to Purchaser, and Purchaser shall purchase from
      the
      Company, One Hundred and Fifty Thousand (150,000) shares of Common Stock (the
      “Shares”)
      at a
      per Share purchase price of Four Dollars ($4.00), for total consideration of
      Six
      Hundred Thousand Dollars ($600,000) (the “Purchase
      Price”).
      The
      Closing shall take place at the offices of the Company or such other mutually
      acceptable location, as soon as possible following satisfaction or waiver of
      each of the conditions set forth in Article
      V
      hereof
      or at such other time as the parties may agree. 

     

    2.2
       Payment
      of the Purchase Price.
      Purchaser shall pay to the Company the Purchase Price for the Shares in the
      following manner upon the execution of this Agreement in immediately available
      funds, by check or wire transfer to an account designated in writing to
      Purchaser by the Company.

     

    2.3
       Restrictions
      on Transfer.
      Notwithstanding anything to the contrary contained herein, Purchaser may,
      directly or indirectly, not sell, assign, pledge, hypothecate or otherwise
      transfer any or all of the Shares, or offer to sell, assign, pledge, hypothecate
      or otherwise transfer any or all of the Shares, prior to the one-year
      anniversary of the date of this Agreement (the “Restricted
      Period”).

     

    2.4
       Additional
      Listing Application with AMEX; Delivery of Shares.
      Promptly after the Closing, the Company shall file all such necessary documents
      with the American Stock Exchange to authorize the listing of the Shares on
      the
      American Stock Exchange, if such documents had not been filed prior to the
      Closing. Promptly after the Company has received the approval from the American
      Stock Exchange for the listing of the Shares, but in no event prior to the
      Closing, the Company shall deliver or cause to be issued in the name of
      Purchaser one or more stock certificates evidencing the Shares, registered
      in
      the name of Purchaser (the “Certificates”);
      provided, however, that until the expiration of the Restricted Period, Purchaser
      shall retain physical possession of the Certificates and shall not deposit
      such
      Certificates in a brokerage or similar account. 

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     


    
      
         

      

      
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    3.1
       Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to Purchaser as follows:

     

    (a)
       Organization;
      Authority.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of New York, with the requisite corporate power
      and
      authority to enter into and to consummate the transactions contemplated by
      this
      Agreement and otherwise to carry out its obligations hereunder and thereunder.
      The issuance by the Company of the Shares to Purchaser hereunder has been duly
      authorized by all necessary action on the part of the Company. This Agreement
      has been duly executed and delivered by the Company and constitutes the valid
      and binding obligation of the Company, enforceable against it in accordance
      with
      its terms.

     

    (b)
       No
      Conflicts.
      The
      execution, delivery and performance of this Agreement by the Company and the
      consummation by the Company of the transactions contemplated hereby do not
      and
      will (i) not conflict with or violate any provision of the Company’s
      organizational or charter documents or (ii) result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which the Company is subject.


     

    (c)  Status
      of Shares.
      The
      Shares, when issued to Purchaser pursuant to this Agreement, will be validly
      issued, fully paid and non-assessable and will have the rights provided in
      the
      Company’s certificate of incorporation. Neither the Company nor any Person
      acting on its behalf has, either directly or indirectly, sold or offered for
      sale any of the Shares, so as to bring the issuance or sale of the Shares within
      the provisions of Section 5 of the Securities Act.

    


    (d)
       Acknowledgment
      Regarding Purchaser’s Purchase of Shares.
      The
      Company acknowledges and agrees that Purchaser is acting solely in the capacity
      of an arm’s length purchaser with respect to this Agreement and the transactions
      contemplated hereby. 

    


    3.2
       Representations
      and Warranties of Purchaser.
      Purchaser hereby represents and warrants to the Company as follows:

     

    (a)
       Organization;
      Authority.
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the state of its incorporation with the requisite corporate
      or
      partnership power and authority to enter into and to consummate the transactions
      contemplated by this Agreement and otherwise to carry out its obligations
      hereunder and thereunder. The purchase by Purchaser of the Shares hereunder
      has
      been duly authorized by all necessary action on the part of Purchaser. This
      Agreement has been duly executed and delivered by Purchaser and constitutes
      the
      valid and binding obligation of Purchaser, enforceable against it in accordance
      with its terms.

     

    (b)
       No
      Conflicts.
      The
      execution, delivery and performance of this Agreement by Purchaser and the
      consummation by Purchaser of the transactions contemplated hereby do not and
      will (i) not conflict with or violate any provision of Purchaser’s
      organizational or charter documents or (ii) result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which Purchaser is subject.

     


    
      
         

      

      
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    (c)
       Investment
      Intent.
      Purchaser is acquiring the Shares as principal for its own account for
      investment purposes only and not with a view to or for distributing or reselling
      the Shares or any part thereof, without prejudice. 

     

    (d)
       Purchaser
      Status.
      At the
      time Purchaser was offered the Shares, it was, and at the date hereof it is,
      an
“accredited investor” as defined in Rule 501(a) under the Securities
      Act.

     

    (e)
       Experience
      of Purchaser.
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Shares, and has so evaluated the merits and risks of such investment.
      Purchaser is able to bear the economic risk of an investment in the Shares
      and,
      at the present time, is able to afford a complete loss of such
      investment.

     

    (f)
       Information.
      Purchaser has requested, received, reviewed and considered all information
      it
      deemed relevant in making an informed decision to purchase the Shares. Purchaser
      understands that its acquisition of the Shares has not been registered under
      the
      Securities Act or registered or qualified under any state securities law in
      reliance on specific exemptions therefrom, which exemptions may depend upon,
      among other things, the bona fide nature of Purchaser’s investment intent as
      expressed herein.

     

    (g)
       Affiliates.
      Purchaser is not an Affiliate of the Company.

     

      (h)
       Consents.
      There
      are no consents required to be obtained by Purchaser in 

    order
      to
      consummate the transactions contemplated hereby.

    


    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1
       Transfer
      Restrictions.

     

    (a)
       The
      Shares may only be disposed of, and Purchaser agrees to only transfer Shares,
      pursuant to an effective registration statement under the Securities Act or
      pursuant to an available exemption from the registration requirements of the
      Securities Act, and in compliance with any applicable state securities laws.
      In
      connection with any transfer of Shares other than pursuant to an effective
      registration statement or to the Company, except as otherwise set forth herein,
      the Company may require the transferor to provide to the Company an opinion
      of
      counsel selected by the transferor and reasonably acceptable to the Company,
      the
      form and substance of which opinion shall be reasonably satisfactory to the
      Company, to the effect that such transfer does not require registration under
      the Securities Act. 

     

    (b)
       Purchaser
      agrees to the imprinting, so long as is required by this Section
      4.1(a),
      of the
      following legend on any certificate evidencing Shares or any portion thereof:
      

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
      EXEMPTION

     


    
      
         

      

      
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    FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS OR BLUE SKY LAWS. 

     

    Certificates
      evidencing Shares shall not be required to contain such legend (i) while a
      Registration Statement covering the resale of such Shares is effective under
      the
      Securities Act, (ii) following any sale of such Shares pursuant to Rule 144,
      (iii) if such Shares are eligible for sale under Rule 144(d), or (iv) if such
      legend is not required under applicable requirements of the Securities Act
      (including judicial interpretations and pronouncements issued by the Staff
      of
      the Commission). 

     

    4.2
       Integration.
      The
      Company shall not, and shall use its commercially reasonable best efforts to
      ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
      offers to buy or otherwise negotiate in respect of any security (as defined
      in
      Section 2 of the Securities Act) that would be integrated with the offer or
      sale
      of the Shares in a manner that would require the registration under the
      Securities Act of the sale of the Shares to Purchaser or that would be
      integrated with the offer or sale of the Shares for purposes of the rules and
      regulations of any Trading Market.

     

    4.3
        Trading
      Restrictions.
      Purchaser agrees that beginning on the date hereof, it will not enter into
      any
      Short Sales. For purposes of this Section
      4.4,
      a
“Short
      Sale”
by
      Purchaser means a sale of Common Stock that is marked as a short sale or has
      the
      effect of a short sale and that is executed at a time when Purchaser has no
      equivalent offsetting long position in the Common Stock. For purposes of
      determining whether Purchaser has an equivalent offsetting long position in
      the
      Common Stock, all Common Stock and all Common Stock that would be issuable
      upon
      conversion or exercise in full of all Options then held by Purchaser (assuming
      that such Options were then fully convertible or exercisable, notwithstanding
      any provisions to the contrary, and giving effect to any conversion or exercise
      price adjustments scheduled to take effect in the future) shall not be deemed
      to
      be held long by Purchaser.

     

    ARTICLE
      V

    CONDITIONS

    


    5.1
       Conditions
      Precedent to the Obligations of Purchaser.
      The
      obligation of Purchaser to purchase the Shares at the Closing is subject to
      the
      satisfaction, or waiver by Purchaser, at or before the Closing, of each of
      the
      following conditions:

     

    (a)
       Representations
      and Warranties.
      The
      representations and warranties of the Company contained herein shall be true
      and
      correct in all material respects as of the date when made and as of the Closing
      as though made on and as of such date;

     


    
      
         

      

      
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    (b)
       Performance.
      The
      Company shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by it at or prior to the Closing;
      and

     

    (c)
       No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits or makes illegal the
      consummation of any of the transactions contemplated by this
      Agreement.

     

    5.2
       Conditions
      Precedent to the Obligations of the Company.
      The
      obligation of the Company to sell the Shares at the Closing is subject to the
      satisfaction or waiver by the Company, at or before the Closing, of each of
      the
      following conditions:

     

    (a)
       Representations
      and Warranties.
      The
      representations and warranties of Purchaser contained herein shall be true
      and
      correct in all material respects as of the date when made and as of the Closing
      Date as though made on and as of such date;

     

    (b)
       Performance.
      Purchaser shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by Purchaser at or prior to the Closing,
      including, but not limited to, payment in full of the Purchase
      Price.

     

    (c)
       No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits the consummation of any
      of
      the transactions contemplated by this Agreement; and

     

    ARTICLE
      VI

    REGISTRATION
      RIGHTS

     

    6.1
       Registration.

     

    (a)
       Purchaser
      shall have the right to request that the Company, and upon such request the
      Company shall, prepare and file with the Commission a Registration Statement
      covering the resale of all Registrable Securities for an offering to be made
      on
      a continuous basis pursuant to Rule 415, (i) no earlier than one hundred and
      twenty (120) days following the payment by Purchaser of the entire Purchase
      Price, or (ii) no earlier than two hundred and seventy (270) days following
      a
      Payment Failure Termination Event. The Registration Statement shall be on Form
      S-3 (except if the Company is not then eligible to register for resale the
      Registrable Securities on Form S-3, in which case such registration shall be
      on
      another appropriate form in accordance herewith).

     

    (b)
       The
      Company shall use commercially reasonable efforts to cause the Registration
      Statement to be declared effective by the Commission as promptly as reasonably
      practicable after the filing thereof, and to keep the Registration Statement
      continuously effective under the Securities Act until the second anniversary
      of
      the Effective Date or such earlier date

     


    
      
         

      

      
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    when
      all
      Registrable Securities covered by such Registration Statement have been sold
      pursuant thereto (the “Effectiveness
      Period”).

     

    (c)
       The
      Company shall notify Purchaser in writing promptly after receiving notification
      from the Commission that the Registration Statement has been declared effective.
      

     

    (d)
       Notwithstanding
      any provision in this Agreement to the contrary, following the 30th
      Trading
      Day following the Effective Date, the Company’s obligations hereunder to file,
      achieve effectiveness of, or maintain effectiveness of a registration statement
      continuously in effect under the Securities Act shall be suspended and all
      penalties and other effects thereof hereunder shall not be applicable during
      any
      period (each such period, a “Suspension
      Period”)
      if, in
      the good faith judgment of the Company’s Board of Directors, it is advisable to
      suspend the use of the Prospectus included therein for a discrete period of
      time
      due to pending material corporate developments or similar material events that
      have not yet been publicly disclosed and as to which the Company believes that
      public disclosure would be prejudicial to the Company or its stockholders;
      provided,
      that
      the Registration Statement shall be suspended for a total of no more than two
      times or for a period of more than, in the aggregate, thirty (30) days in any
      twelve (12) month period. Immediately
      after the end of any Suspension Period under this Section
      6.1(d),
      the
      Company shall take commercially reasonable actions necessary to restore the
      effectiveness of the applicable Registration Statement and the ability of
      Purchaser to publicly resell its Registrable Securities pursuant to such
      effective Registration Statement.

     

    6.2
       Registration
      Procedures.
      In
      connection with the Company’s registration obligations hereunder, the Company
      and Purchaser (in respect of Section
      6.2(k))
      shall:

     

    (a)
       (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to each Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep the Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement, and as so supplemented
      or
      amended to be filed pursuant to Rule 424; and (iii) respond as promptly as
      reasonably possible to any comments received from the Commission with respect
      to
      the Registration Statement or any amendment thereto.

     

    (b)
       Use
      commercially reasonable efforts to avoid the issuance of or, if issued, obtain
      the withdrawal of (i) any order suspending the effectiveness of any Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, as soon as possible.

     

    (c)
       Promptly
      deliver to Purchaser, without charge, as many copies of the Prospectus or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as Purchaser may reasonably request. The Company hereby
      consents to the use of such Prospectus and each amendment or supplement thereto
      by Purchaser in connection

     


    
      
         

      

      
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    with
      the
      offering and sale of the Registrable Securities covered by such Prospectus
      and
      any amendment or supplement thereto.

     

    (d)
       Prior
      to
      any public offering of Registrable Securities, use commercially reasonable
      efforts to register or qualify or cooperate with Purchaser in connection with
      the registration or qualification (or exemption from such registration or
      qualification) of such Registrable Securities for offer and sale under the
      securities or Blue Sky laws of such jurisdictions within the United States
      as
      Purchaser reasonably requests in writing, to keep each such registration or
      qualification (or exemption therefrom) effective during the Effectiveness
      Period.

     

    (e)
       Reasonably
      cooperate with any reasonable due diligence investigation undertaken by
      Purchaser in connection with the sale of Registrable Securities, including,
      without limitation, by making available any documents and information;
provided
      that the
      Company will not deliver or make available to Purchaser material, nonpublic
      information unless Purchaser specifically requests in advance to receive
      material, nonpublic information in writing.

     

    (f)
       Complete
      a questionnaire (in customary form) and to provide such additional information
      and assistance as shall be reasonably requested by the Company in order to
      effect registration of the Shares to be purchased by Purchaser
      hereunder.

     

    6.3
       Registration
      Expenses.
      If
      Purchaser shall have paid the Purchase Price to the Company in full prior to
      the
      request for the Company to file a Registration Statement as provided in Section
      6.1(a), the Company shall pay (or reimburse Purchaser for) all fees and expenses
      incident to the performance of or compliance with this Agreement by the Company,
      including without limitation (collectively, “Registration
      Expenses”)
      (a)
      all registration and filing fees and expenses, including without limitation
      those related to filings with the Commission, any Trading Market and in
      connection with applicable state securities or Blue Sky laws, (b) printing
      expenses (including without limitation expenses of printing certificates for
      Registrable Securities and of printing prospectuses reasonably requested by
      Purchaser), (c) messenger, telephone and delivery expenses, (d) fees and
      disbursements of counsel for the Company, (e) fees and expenses of all other
      Persons retained by the Company in connection with the consummation of the
      transactions contemplated by this Agreement, and (f) all listing fees to be
      paid
      by the Company to the Trading Market. 

     

    


    6.4
       Indemnification

     

    (a)
       Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless Purchaser, the officers, directors, partners, members, agents,
      Affiliated investment advisors and employees of Purchaser, each Person who
      controls Purchaser (within the meaning of Section 15 of the Securities Act
      or
      Section 20 of the Exchange Act) and the officers, directors, partners, members,
      agents and employees of each such controlling Person, to the fullest extent
      permitted by applicable law, from and against any and all Losses, as incurred,
      arising out of or relating to any untrue or alleged untrue statement of a
      material fact contained in the Registration Statement, any Prospectus or any
      form of prospectus or in any amendment or supplement thereto or in
      any

     


    
      
         

      

      
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    preliminary
      prospectus, or arising out of or relating to any omission or alleged omission
      of
      a material fact required to be stated therein or necessary to make the
      statements therein (in the case of any Prospectus or form of prospectus or
      supplement thereto, in the light of the circumstances under which they were
      made) not misleading, except to the extent, but only to the extent, that such
      untrue statements, alleged untrue statements, omissions or alleged omissions
      are
      based solely upon information regarding Purchaser furnished in writing to the
      Company by Purchaser expressly for use therein, or to the extent that such
      information relates to Purchaser or Purchaser’s proposed method of distribution
      of Registrable Securities and was reviewed and expressly approved in writing
      by
      Purchaser expressly for use in the Registration Statement, such Prospectus
      or
      such form of Prospectus or in any amendment or supplement thereto. The Company
      shall notify Purchaser promptly of the institution, threat or assertion of
      any
      Proceeding of which the Company is aware in connection with the transactions
      contemplated by this Agreement.

     

    (b)
       Indemnification
      by Purchaser.
      Purchaser shall indemnify and hold harmless the Company, its directors,
      officers, agents and employees, each Person who controls the Company (within
      the
      meaning of Section 15 of the Securities Act and Section 20 of the Exchange
      Act),
      and the directors, officers, agents or employees of such controlling Persons,
      to
      the fullest extent permitted by applicable law, from and against all Losses
      arising solely out of any untrue statement of a material fact contained in
      the
      Registration Statement, any Prospectus, or any form of prospectus, or in any
      amendment or supplement thereto, or arising solely out of any omission of a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of any Prospectus or form of prospectus or supplement
      thereto, in the light of the circumstances under which they were made) not
      misleading to the extent, but only to the extent, that such untrue statement
      or
      omission is contained in any information so furnished in writing by Purchaser
      to
      the Company specifically for inclusion in such Registration Statement or such
      Prospectus or to the extent that such untrue statements or omissions are based
      upon information regarding Purchaser furnished in writing to the Company by
      Purchaser expressly for use therein, or to the extent that such information
      relates to Purchaser or Purchaser’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      Purchaser expressly for use in the Registration Statement, such Prospectus
      or
      such form of Prospectus or in any amendment or supplement thereto. 

     

    (c)
       Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all reasonable fees and expenses incurred in connection with
      defense thereof; provided,
      that
      the failure of any Indemnified Party to give such notice shall not relieve
      the
      Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
      except (and only) to the extent that it shall be finally determined by a court
      of competent jurisdiction (which determination is not subject to appeal or
      further review) that such failure shall have proximately and materially
      adversely prejudiced the Indemnifying Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the reasonable fees
      and expenses of such

     


    
      
         

      

      
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    counsel
      shall be at the expense of such Indemnified Party or Parties unless: (i) the
      Indemnifying Party has agreed in writing to pay such fees and expenses; or
      (ii)
      the Indemnifying Party shall have failed promptly to assume the defense of
      such
      Proceeding and to employ counsel reasonably satisfactory to such Indemnified
      Party in any such Proceeding; or (iii) the named parties to any such Proceeding
      (including any impleaded parties) include both such Indemnified Party and the
      Indemnifying Party, and such Indemnified Party shall have been advised by
      counsel that a conflict of interest is likely to exist if the same counsel
      were
      to represent such Indemnified Party and the Indemnifying Party (in which case,
      if such Indemnified Party notifies the Indemnifying Party in writing that it
      elects to employ separate counsel at the expense of the Indemnifying Party,
      the
      Indemnifying Party shall not have the right to assume the defense thereof and
      such counsel shall be at the expense of the Indemnifying Party, provided, the
      Indemnifying Party shall only be required to pay the reasonable fees and
      expenses of one separate counsel). The Indemnifying Party shall not be liable
      for any settlement of any such Proceeding effected without its written consent,
      which consent shall not be unreasonably withheld. No Indemnifying Party shall,
      without the prior written consent of the Indemnified Party, effect any
      settlement of any pending Proceeding in respect of which any Indemnified Party
      is a party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such Proceeding.

     

    6.5
       Dispositions.
      Purchaser agrees that it will comply with the prospectus delivery requirements
      of the Securities Act as applicable to it in connection with sales of
      Registrable Securities pursuant to the Registration Statement. The Company
      may
      provide appropriate stop orders to enforce the provisions of this
      paragraph.

     

    ARTICLE
      VII

    MISCELLANEOUS

     

    7.1
       Termination.
      This
      Agreement may be terminated by the Company or Purchaser, by mutual agreement
      of
      the parties;
      provided
      that no
      such termination will affect the right of any party to sue for any breach by
      the
      other party.

     

    7.2
       Fees
      and Expenses.
      Except
      as expressly set forth in this Agreement to the contrary, each party shall
      pay
      the fees and expenses of its advisers, counsel, accountants and other experts,
      if any, and all other expenses incurred by such party incident to the
      negotiation, preparation, execution, delivery and performance of this Agreement.
      Purchaser shall pay all transfer agent fees, stamp taxes and other taxes and
      duties levied in connection with the issuance of the Shares.

     

    7.3
       Entire
      Agreement.
      This
      Agreement, together with any Schedules hereto, contain the entire understanding
      of the parties with respect to the subject matter hereof and supersede all
      prior
      agreements and understandings, oral or written, with respect to such matters,
      which the parties acknowledge have been merged into such documents, exhibits
      and
      schedules. At or after the Closing, and without further consideration, the
      Company and Purchaser will execute and deliver to the other party such further
      documents as may be reasonably requested in order to give practical effect
      to
      the intention of the parties under this Agreement. 

     


    
      
         

      

      
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    7.4
       Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      prior to 5:00 p.m. (local time of the recipient) on a Business Day, (b) the
      next
      Business Day after the date of transmission, if such notice or communication
      is
      delivered via facsimile at the facsimile number specified in this Section on
      a
      day that is not a Business Day or later than 5:00 p.m. (local time of the
      recipient) on any Business Day, (c) the Business Day following the date of
      deposit with a nationally recognized overnight courier service, or (d) upon
      actual receipt by the party to whom such notice is required to be given. The
      addresses and facsimile numbers for such notices and communications are as
      follows (or such other address or facsimile number as may be designated in
      writing hereafter, in the same manner, by any such Person):

     

    If
      to the
      Company:

     

    28
      East
      Main Street

    Suite
      1525 

    Rochester,
      NY 14614

    Facsimile
      No: (585)
      325-2977

    Attn:
      Chief Executive Officer 

    


    With
      a
      copy to: 

    


    28
      East
      Main Street

    Suite
      1525 

    Rochester,
      NY 14614

    Facsimile
      No: (585)
      325-2977

    Attn:
      General Counsel 

    


    If
      to
      Purchaser:

    


    11
      Willard Road

    Norwalk,
      CT 06851

    Facsimile
      No.: 203-846-1830

    Attn:
      Mr.
      Baum

    


    With
      a
      copy to: 

    


    2461
      South Clark Street

    Suite
      720

    Arlington,
      VA 22202 

    Facsimile
      No.: 703-418-6322 

    Attn:
      Tony Acri

    


    7.5
       Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and Purchaser
      or,
      in the case of a waiver, by the party against whom enforcement of any
      such

     


    
      
         

      

      
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    waiver
      is
      sought. No waiver of any default with respect to any provision, condition or
      requirement of this Agreement shall be deemed to be a continuing waiver in
      the
      future or a waiver of any subsequent default or a waiver of any other provision,
      condition or requirement hereof, nor shall any delay or omission of either
      party
      to exercise any right hereunder in any manner impair the exercise of any such
      right. 

     

    7.6
       Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

     

    7.7
       Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of Purchaser. 

     

    7.8
       No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except that each Related
      Person is an intended third party beneficiary of Section
      4.8
      and each
      Indemnified Party is an intended third party beneficiary of Section
      6.4
      and (in
      each case) may enforce the provisions of such Sections directly against the
      parties with obligations thereunder.

     

    7.9
       Governing
      Law; Venue; Waiver Of Jury Trial.
      ALL
      QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
      OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND PURCHASER HEREBY
      IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
      SITTING IN THE CITY OF ROCHESTER, COUNTY OF MONROE FOR THE ADJUDICATION OF
      ANY
      DISPUTE BROUGHT BY THE COMPANY OR PURCHASER HEREUNDER, IN CONNECTION HEREWITH
      OR
      WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY
      IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING
      BROUGHT BY THE COMPANY OR PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
      TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING
      IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS
      AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
      BY
      MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
      (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
      TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
      AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
      SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
      PERMITTED BY LAW. THE COMPANY AND PURCHASER HEREBY WAIVE ALL RIGHTS TO A TRIAL
      BY JURY.

     


    
      
         

      

      
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    7.10
       Survival.
      The
      representations, warranties, agreements and covenants contained herein shall
      survive the Closing and the delivery of the Shares, as applicable. 

     

    7.11
       Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

     

    7.12
       Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    7.13
       Replacement
      of Shares.
      If any
      certificate or instrument evidencing any Shares is mutilated, lost, stolen
      or
      destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement
      Shares.

     

    7.14
       Adjustments
      in Share Numbers and Prices.
      In the
      event of any stock split, subdivision, dividend or distribution payable in
      shares of Common Stock (or other securities or rights convertible into, or
      entitling the holder thereof to receive directly or indirectly shares of Common
      Stock), combination or other similar recapitalization or event occurring after
      the date hereof, each reference herein to a number of shares or a price per
      share shall be amended to appropriately account for such event.

     

     

    [SIGNATURE
      PAGE TO FOLLOW]

     

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized signatories as of the date first
      indicated above.

     

    DOCUMENT
      SECURITY SYSTEMS, INC.

     

     

    By: 
      /s/
      Patrick White

      
        

      

    

    Name: 
      Patrick
      White

    Title: 
      Chief
      Executive Officer

     

     

    WALTON
      INVESCO INC.

     

     

    By: 
      /s/
      Walter Baum

      
        

      

    

    Name: 
      Walter
      Baum

    Title: 
      President

     

     

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